Electric vehicles (EVs) were expected to rapidly replace internal combustion engines (ICEs), and green hydrogen was hailed as a breakthrough fuel that could transform heavy industry and energy systems.
But according to Dr Penny Byrne, ESG and climate change investment analyst at SBG Securities, the reality behind the hype is more complex.
Electric vehicles: growth, but not everywhere
After a massive global push to phase out ICEs and shift to EVs, momentum appears to be slowing – at least outside of one dominant market.
“The EV market is doing very well, but take China out, and it’s not. China is the powerhouse for EV production and use,” says Byrne.
Elsewhere, the picture is more uneven.
Byrne notes that many EV manufacturers and suppliers rushed into production during the boom years – and not all survived. Companies such as Nikola, Fisker Automotive, Lordstown Motors, Canoo and Proterra have filed for bankruptcy.
“People are driving cars with no support. The car still drives, but you can't, for example, listen to music or use navigation because the company that built it no longer exists,” she says.
Weakening demand and policy shifts
Established carmakers are also feeling the pressure.
According to Reuters, global carmakers have booked about $55 billion in writedowns in the past year as they scale back their EV ambitions.
Ford announced in December 2025 a $19.5 billion writedown as it axes several EV models in response to the Trump administration's policies and weakening EV demand in the US.
General Motors said in January that it will lose another $6 billion as a result of its decision to pull back on electric cars. This comes on top of a $1.6 billion charge it disclosed in October for changes to its EV plans.
Stellantis recently announced €22.2 billion in charges as it scales back its EV plans, with Reuters reporting that the group is quietly resurrecting diesel versions of at least seven car and passenger van models across Europe.
Stellantis CEO Antonio Filosa said the writedowns were due to the "cost of over-estimating the pace of the energy transition".
Volkswagen said last September it would take a €5.1 billion hit from a far-reaching product overhaul at its Porsche unit, which delayed some EV models in favour of hybrids and ICE cars. That included an impairment charge of around $3.5 billion.
German manufacturers, in particular, are under strain, losing ground in China to local competitors while also facing growing competition at home from Chinese EV imports.
In response to pressure from the region’s auto sector, the European Commission unveiled a plan in December to amend the EU's effective ban on new combustion-engine cars from 2035. Under the new plan, 90% of cars sold after 2035 have to be zero-emission, rather than the previous 100%. If approved by EU governments and the European Parliament, the move would allow continued sales of some non-electric vehicles.
“A lot of countries are trying to protect their own industries rather than letting China make everything and sell it to them cheaper,” Byrne says.
So, will EVs replace ICE vehicles?
“No, I don't think so. I think EVs will become a bigger part of the story. It's low-hanging fruit for many big corporations with large truck fleets to reduce their emissions and potentially lower their costs,” Byrne says.
Despite the setbacks, she expects EV expansion to continue, particularly in China and Europe, and potentially in the US.
However, she is more cautious about developing regions.
“In countries like South Africa, and in Africa in general, as well as in other developing nations, we've got huge energy poverty to start with, so the idea of electrifying everything, including vehicle transport, may be challenging. I'm not sure it's going to penetrate through the world the way it's envisioned.”
Green hydrogen: still in play, but scaled back
Green hydrogen was seen as a potential game-changer for the clean energy transition, with South Africa and Chile considered potential exporters given their abundant solar and wind resources needed to power large-scale hydrogen production.
But Byrne believes expectations have moderated.
“I don't think green hydrogen is going anywhere, but I do expect that it’s a smaller piece of the global energy puzzle than it was expected to be five years ago.”
The International Energy Agency (IEA) had forecast in its Net Zero Emissions 2050 scenario that green hydrogen production would increase to 80 Mt by 2030. In its latest report, the green hydrogen target has fallen to 50 Mt, and less than 1% of the hydrogen currently produced globally is low-emissions or green hydrogen.
Large-scale deals have also been slower to materialise.
“We haven't seen huge green hydrogen deals come through yet, but it takes years to set up these big projects.”
Even so, she anticipates more cancellations in the near term.
“I expect to see more companies and countries abandon green hydrogen projects than take on new ones.”
She says a number of technical and practical challenges were overlooked during the initial enthusiasm. Hydrogen is highly combustible and difficult to transport, factors that complicate infrastructure development and add cost.
The views and opinions shared are for informational purposes only. They are not intended to serve as investment advice and do not represent the views or opinions of Standard Bank. This information should be used as a starting point for generating investment ideas, and should not be relied upon as the basis for making investment decisions. The Standard Bank of South Africa Limited will not be responsible for the results of any investment decisions made based on the views provided.
